Annual Report 2010

Contents 2

A word from the Chairman

3

A word from the Managing Director

5

Business concept and strategy

6

The market and the outside world

10

Operations

5

12   Construction 16   Service 19  Machinery and own workshop

Operations

19  Mechanical track condition measurement 22

Sustainability report

23   Sustainable infrastructure 24   Management and organisation 25   Environment 28   Employees 35

Administration Report

40   Corporate Governance Report 2010 44   Internal control 46   Board of Directors 48   Management 50

Income and expenditure accounts

51

Balance sheets

53

Change in equity

53

Cash flow statements

54

Notes

65

Auditors’ Report

66

GRI table

68

Auditor's report, sustainability report



Addresses

22 Sustainability

35 Financial reporting

D  infranord annual report 2010

Infranord in brief Infranord is the Nordic region's contractor of railway engineering services. The focus lies on maintaining and modernising existing railways, as well as developing and building track for the future. Through development and co-operation with customers and other players, Infranord is contributing towards safe, punctual and environmentally sound services. Infranord offers a complete range of services and possesses unique knowledge about Sweden's rail infrastructure.

2010 in brief New company. Infranord, previously known as Banverket Production, commenced operations as a State-owned company on 1 January 2010.

Two subsidiary companies. During the year,  Infranord formed subsidiary companies in Denmark and Norway.

Maintenance, Stockholm Central. Infranord  won the operations and maintenance contract on Sweden's busiest and technically most complicated stretch of rail: Älvsjö–Ulriksdal/ Sundbyberg, which also includes Stockholm Central Station.

 he City Tunnel. The City Tunnel in Malmö, T where Infranord has e.g. been involved in building track using a special technology to reduce noise levels under central Malmö, was inaugurated in December.



Track replacement. Infranord won the assign­ ment to fully upgrade 52 kilometres of track between Emmaboda and Karlskrona.

Maintenance, Coast-to-Coast. Infranord was  entrusted to continue maintaining the sections Hässleholm–Karlskrona (Blekinge Coast Line), Värnamo–Kalmar (part of the Coast-to-Coast Line) and Falköping–Landeryd (Jönköping Line).  he Bothnia Line. The Bothnia Line, where T Infranord e.g. has been involved in the installation of the European signalling system ERTMS, was inaugurated in August.



 he Norway/Vänern Line. Infranord won the T assignment to modernise the Velanda–Prässebo track section on the Norway/Vänern Line.

Key figures

2010

2009

Net sales, SEK million Operating profit/loss, SEK million Operating margin, % Equity/assets ratio, % Number of non-tenured employees at year-end

4,507 30 0.67 39.2 2,964

4,414 –74 neg. 37.3 3,104

infranordannual report2010  1

More railway for the money Infranord's first business year as an independent company, working on a deregulated market that is subject to competition, has been both eventful and interesting.

Jan Sundling, Chairman of the Board of Directors, Infranord

The past two years have been a revolutionary period for the rail sector in Sweden. Deregulation, with more extensive competition as a consequence, has placed new, tougher demands on all players, clients and practitioners. The Swedish Transport Administration in particular, which is far and away our largest customer, has changed and adapted to the new market conditions, which in the long run have had a positive impact on Infranord. The potential for Infranord to build up a new brand, develop and refine products and services, and rationalise the work within the entire company, has been well received internally. The entire organisation has been open to the idea of adopting a new working method – a precondition for Infranord being able to retain its leading position on a market that is experiencing rapid change. With clearer procurement, proposals and demands for new and innovative solutions to known problems, and an explicit desire to invite more players onto the Swedish market, the Administration has redrawn the map for Infranord's operations. This has resulted in necessary changes and improvements through the whole of Infranord's organisation. After two difficult winters, rail traffic in ­Sweden has been subjected to close scrutiny, and in many

cases this has resulted in criticism. One commonly held belief is that the Swedish rail infrastructure just needs more money. This assertion is correct to some extent. It is true that the rail network in Sweden is underfinanced in many respects, and investment will be required for new construction, expansion and refurbishment work, as well as for service and maintenance, in order to improve accessibility with the same high levels of safety. However, it is not enough simply to invest more money. It is important for all the players – track owners, operators and contractors such as Infranord – to do the right things in the right way. After all, all the players are working with the same infrastructure, which means that it is necessary to develop a common desire to ensure that the combined resources are used effectively – for us to work together to ensure that we develop more railway for the money. I am convinced that a good solution will be found to the problems rail transport has had to deal with in recent years. The ambition, desire and resources for lasting change and improvement are present in all the players, and Infranord has the ambition to be at the forefront of such a development. Within Infranord, we believe that co-operation and open competition can work in a qualityraising symbiosis. We know what is required for Infranord's part, and are prepared both organisationally and strategically to live up in a cost-effective manner to the goal of creating more railway for the money. Stockholm, March 2011

Jan Sundling Chairman of the Board of Directors

2  infranord annual report 2010A word from the Chairman

Improved profits and increased incoming orders The 2010 business year will go down in history as an exciting year for Infranord, a year full of challenges. It was also Infranord's first year as an independent company, with greater operational freedom in the work of achieving the goals we laid down for our business. Net sales for 2010 increased to SEK 4,507 million (4,414) and operating profit amounted to SEK 30 million (-74) . The increase in sales and the improvement in profits is good evidence that Infranord is standing up well in the face of stiffening competition. It is with satisfaction that I can state that Infranord strengthened its leading role on the market during the year. Incoming orders increased during the year by 16 per cent to SEK 4,992 million, and at the end of the year the orderbook stood at SEK 5,129 million, an improvement of 11 per cent compared to the previous year. The work on developing Infranord's business has consequently produced results. Activities have improved on all fronts, and the significant turnaround in profits is good evidence that Infranord really is on the right tracks. It is pleasing to note that major projects, such as the City Tunnel in Malmö, have been so successful. The work commenced in autumn 2008 and was completed in autumn 2010. Infranord has delivered in accordance with the specification in this respect, both faster and at a lower price than estimated. During the year we have launched a collaboration with Peab regarding a double track project on the Emmaboda–Karlskrona section. For Infranord's part, this is the first time we are participating in a joint venture with a private player, something that would have been impossible prior to privatisation. Other important assignments that Infranord has won during the year include the operations and maintenance contract for Stockholm Central, which is an assignment in Sweden's most complex rail engineering environment with services 24 hours a day, as well as the operations and main-

A word from the Managing Director 

Niclas F. Reinikainen, Managing Director, Infranord

tenance contract for the Coast-to-Coast Line, the Blekinge Coast Line and the Jönköping Line. Important steps to Denmark and Norway The establishment of Infranord in Denmark has also been successfully implemented. There is now a strong platform for gradually extending the market beyond Sweden's borders and finding an outlet for our products and service, which we know stand up very well in the face of international competition. Our first steps onto the Norwegian market began with the formation of Infranord Norge AS. Infranord's establishment in Denmark and Norway is based on a long-term approach, and our aim is to grow in a controlled manner and prove, both to our customers and competitors, that Infranord is here to stay. Internally, the 2010 business year has been largely characterised by work towards change targeted at significantly strengthening our customer offering. Our overall resources have been concentrated on the Head Office in Solna, and intensive work has been conducted with the aim of intro-

infranord annual report 2010  3

ducing a common working method throughout the entire Group. The challenge lies in developing our own "Best Practice" that will cover our entire customer offering. In short, co-ordinating the best, proven and tested technologies, methods and processes for all our products and services. Sustainable development All activities within Infranord should contribute towards growth that is sustainable in the long term from a social, environmental and economic perspective. During the year we have adopted a Code of Conduct that clarifies our attitude and undertakings towards employees, suppliers and other stakeholders.'

"Our most important success factor is our ability, through new and more efficient working methods, to utilise and develop skills within the entire Group." Our priorities relate primarily to the health and safety of our employees and sub contractor, how we manage our own environmental impact as well as the provision of skills. Within the field of safety there is a Zero Vision, and we enjoy a very constructive collaboration with the trade unions in this area. With a workforce with an average age approaching fifty, significant efforts also have to be made to safeguard Infranord's future expertise and competitiveness. We are therefore working on a skills provision strategy that incorporates a combination of measures that will safeguard both growth and profitability as well as skills development. When it comes to the environment, we are working in various ways to reduce our fuel consumption. We are also striving to reuse as much material as possible, in order thereby to minimise waste from operations and to be cost-effective. You can read more about our sustainability work on pages 22–33. The future Demand for Infranord's products and services will continue to increase. In other words, the market situation in the future is very satisfactory.

Our most important success factor is our ability, through new and more efficient working methods, to utilise and develop skills within the entire Group. In order to further secure our market-leading role, it is also necessary for our important safety work consistently to remain at the highest possible level, for the general level of service to be further improved, as well as for us to further develop our businesslike approach and become more proactive in our day-to-day work. By proactivity I mean all of Infranord's employees looking to our customers' needs and constantly trying to work a little better and a little smarter. A good example of the latter is the snow insurance we offered to Swedish Transport Administration in autumn 2010. Following the snow chaos Sweden experienced at the start of 2010, there was considerable interest in safeguarding sufficient resources in conjunction with heavy snowfall. The snow insurance gave the Swedish Transport Administration the potential to call for extraordinary resources to deal with snow problems on sections of track that are also maintained by other railway contractors. Finally, I would like to say a big thank you to all the employees within Infranord for their excellent work during 2010. Increasingly high demands are being placed on Infranord as a supplier, and major and minor challenges are an ever-present ingredient in our day-to-day operational work. The chances for a successful 2011 are good. By maintaining good control over our entire business and successively improving profitability, our ambition for the future is to be able to increase our rate of expansion. Stockholm, March 2011

Niclas F. Reinikainen Managing Director Infranord

4  infranord annual report 2010A word from the Managing Director

Business concept and strategy Infranord is the Nordic region's leading rail contractor. The focus lies on maintaining and modernising existing railways, as well as building track for the future. Infranord offers a complete range of services and possesses unique knowledge about Sweden's rail infrastructure. A complete supplier Infranord maintains railway infrastructure of all types, as well as planning and implementing new construction, expansion and refurbishment projects relating to the railway. Infranord has machinery, for track and point alignment, as well as for track replacement and point installation work. Infranord also manufactures its own rail products and components. A leading player Infranord will offer customers the most costeffective solutions and be the most attractive workplace for anyone who wants to work within construction and infrastructure. The company will be known for its extensive knowledge as regards safety, and will offer a progressive workplace where safety and working environment issues are taken extremely seriously. Constant improvements and a clear customer focus Infranord's overall strategy relates to operational excellence, i.e. delivering good quality at the lowest possible price. Through standardised processes and methods, the company's resources will be used in an efficient manner, at the same time as ensuring that the customer receives the same quality and is treated equally, regardless of where the work is carried out. During 2010, Infranord implemented a uniform organisation and common roles in all the regions.

Administration has been streamlined and centralised, and a common overall working method is currently being introduced throughout the organisation. Operational excellence also stipulates demands for operational leadership. The leadership within Infranord must be characterised by results, participation and trust. All development of new products and services must be based on a clear customer focus. In order to clarify Infranord's position on the market, continued work to develop the brand is also anticipated. The aim is to be at the forefront of developments within the company's area of operations and continually to communicate the results that have been achieved. Infranord will focus on continual improvements throughout the business. Customers should feel that the company is supplying good-quality, costeffective solutions, and the owner should receive long-term, significant value. Sustainable development All activities within Infranord should contribute towards growth that is sustainable in the long term from a social, environmental and financial perspective. The company should always act with consideration for the world around it, and should be a company in which the experiences of all the employees are utilised and where diversity is viewed as a business asset.

Business concept

OBJECTIVE

Strategy

Infranord's business concept is to supply complete rail engineering services and contracts.

Infranord should be the Nordic region's leading contractor as regards rail engineering services and contracts.

Operational excellence and sustainable development.

Business concept and strategy 

infranord annual report 2010  5

Infranord's arena Tr

owne

rs

erators

CargoNet

Storstockholms lokaltrafik (SL)

The Swedish Transport Administration

DSB Sverige

Svenska Tågkompaniet

Green Cargo

TGOJ Trafik

Storstockholms lokaltrafik (SL)

Göteborgs Spårvägar

Tågab

Hector Rail

Veolia Transport

SJ

Etc.

lc

o n t r a c to

track owners

OPERATORS A-Train

ai

Municipalities

SSAB trafikverket

The Bothnia Line The Inland Line

The Öresund Bridge Consortium Ports

LKAB

övriga

Arlanda Line

Etc.

r s

r

op

ac k

rail CONTRACTORS Infranord Strukton Rail Balfour Beatty Rail VR-Track Etc.

övriga

övriga

övriga

trafikverket

infranord

infranord

Swedish Transport Administration Other players

By the end of 2010, there were just over 40 operators.

The Swedish Transport Administration owns and manages approximately 90% of Sweden's railways.

Since the beginning of the 2000s, the deregulation of the Swedish rail market has created one of the most competitive markets in Europe. The Swedish Transport Administration is the dominant track owner, whereas competition on the contract market is successively increasing as more European players are starting to become established in the Nordic

Infranord Other players Infranord's market share stands at approximately 43%.

region. Deregulation has not yet progressed as far in Denmark, Norway and Finland as it has in Sweden. In the future, however, it is that the market conditions will probably be the same throughout the Nordic region.

6  infranord annual report 2010The market and the outside world

The market and the outside world Infranord remains the leading player on the Nordic rail market and is one of Sweden's six largest construction companies. Sweden is Infranord's main market. During 2010, subsidiaries have also been formed in Denmark and Norway.

The prospects for the future on the Nordic rail market remain very good. Demand for rail transport is increasing steadily, and is expected to increase further over the next five years in Sweden and the rest of the Nordic region. Among both passengers and freight carriers, there is a strong demand for as regards accessibility and a wide range of transport options with minimal environmental impact. In Sweden, Denmark and Norway, large parts of the railway networks are fully utilised and need to be modernised in order to meet the increased demand. In order to increase train capacity further, new investment are required in the form of new construction, expansion or refurbishment, or alternatively increased initiatives in respect of operations and maintenance. There is general political consensus in the Nordic countries regarding the continued expansion and modernisation of the railways. One political objective from Europe is to transfer substantial proportion of transport from the roads to the railway, which will require significant investment. In line with the demographic movements, where people work in one municipality and live in another, there are also increasing demands for rapid, efficient and environmentally friendly transport between different municipalities. This relates primarily to commuter services, concentrated on the regions around the metropolitan cities. Extensive investments in future years The funding of new construction, expansion and refurbishment of the railways is dependent on political decisions. In Sweden, a national plan for the transport system has been put forward, known as the Transport Plan, which proposes that SEK 64 billion be allocated for the operation and maintenance of the railways during the period 2010–2021,

The market and the outside world 

entailing an average of approximately SEK 5 billion per year. In Denmark, corresponding investments are estimated to amount to around DKK 70 billion over the next ten years. There is also a political ambition in Norway to invest more in the railways. Another significant portion of the future initiatives relates to investment in new railway technology. One example is the introduction of the new ERTMS system, a joint traffic control system for rail traffic in Europe. Up until now, the Bothnia Line and the City Tunnel in Malmö are the first stretches of line in Sweden to have been equipped with the ERTMS system. After the past two winters, which have entailed significant problems for rail traffic, political demands have been placed on the Swedish Transport Administration regarding climate-proofing the rail infrastructure. The work of developing new methods for snow management has also become more of a priority. Ever stiffer competition Competition on the Swedish rail market has increased successively since the start of the 2000s. Competition regarding major infrastructure projects and extensive operation and maintenance assignments has stiffened further during 2010. Infranord's largest client, the Swedish Transport Administration, has been encouraging foreign contractors to submit tenders in recent years. The increased competition is encouraging Infranord to implement continued streamlining, to further develop internal processes and to develop new products and services. Infranord's market in Sweden amounted to approximately SEK 10 billion in 2010, made up of around 80 per cent of assignments from the Swed-

infranord annual report 2010  7

ish Transport Administration, 15 per cent from Storstockholms Lokaltrafik (SL) and the remainder from other track owners. Infranord's market share for 2010 reached 43 per cent, made up of 32 per cent within Construction and 48 per cent within Service. Infranord's largest customer is the Swedish Transport Administration, which covered 84 per cent of sales in 2010. The remainder was divided relatively evenly between Storstockholms lokaltrafik (SL) and major industrial customers.

ing 2010. A wholly owned subsidiary company was formed in Denmark, constituting a necessary platform for being able to compete for interesting assignments. Infranord's resources and expertise in southern Sweden are a major competitive advantage in this context. In Norway, the work in 2010 has focused on developing a business plan and making Infranord's offers tangible. Infranord Norge AS was formed at the end of the year.

First steps out into the Nordic region Infranord's ambition to establish operations beyond Sweden's borders became a reality dur-

8  infranord annual report 2010The market and the outside world

Method development for increased efficiency "It is important to review the entire process, from tender work to cleaning and decommissioning an establishment," says Johan Levál, who is leading the sleeper replacement project. During 2010, work commenced with the aim of rationalising some of the most common tasks within Infranord's activities. Two project groups were assembled, and were commissioned to

The market and the outside world 

review the working methods for sleeper and track replacement projects. The aim is to make the tasks easier and faster to implement. As things stand at present, solid analysis work has been carried out in order to define measurable factors. One challenge in this context is that the rail engineering solutions often differ depending on where in the country the line is located.

infranord annual report 2010  9

Infranord offers complete rail engineering services and contracts Abisko

Kiruna Gällivare

Morjärv Arvidsjaur

Haparanda

Boden Luleå

Storuman Vilhelmina Lycksele Hoting

Strömsund

Vännäs

Mellansel Duved Östersund

Näsåker Sollefteå

Ånge Sveg Ljusdal

Umeå

Örnsköldsvik

Sundsvall Hudiksvall Bollnäs

Mora Borlänge Ludvika Fagersta

Dingle Uddevalla

Göteborg

Tierp Uppsala

Upplands Väsby Västerås Kil Solna + Sundbyberg Kvicksund Kristinehamn Stockholm + Tomteboda Örebro EskilsSödertälje tuna Hallsberg Katrineholm Nyköping Mellerud Töreboda Norrköping Vänersborg Linköping Herrljunga Mjölby Falköping Jönköping Establishment locations Borås Västervik Nässjö Hultsfred

Värnamo Varberg

Alvesta Kalmar

Halmstad Hässleholm Helsingborg Köpenhamn

Gävle

Malmö

Karlshamn Kristianstad

Infranord is established in some 80 locations right across the country, there are also temporary establishments in conjunction with major projects. At the end of 2010, subsidiary companies were also established in Denmark and Norway. Infranord has approximately 3,000 employees, of which just over 2,000 are engineers with extensive knowledge and skills within rail, electrical, signalling and telecom engineering.

Construction Infranord plans and implements new construction, expansion and refurbishment projects within the railway sector. The work includes extensive rail yard refurbishments, track replacement as well as the new construction and refurbishment of signalling systems and signal boxes. The work also includes overhead line replacement, sleeper replacement, point replacement and complex signalling installations. Infranord accepts full responsibility for traffic, planning, quality, co-ordinating safety, the working environment and the environment, both for smaller and larger assignments.

10  infranord annual report 2010Operations

Infranord is the Nordic region's leading rail contractor. The focus lies on maintaining and modernising existing railways, as well as developing and building track for the future. Through development and co-operation with customers and other players, Infranord is contributing towards safe, punctual and environmentally sound services. Infranord offers a complete range of services and possesses unique knowledge about Sweden's rail infrastructure.

Other activities

Infranord has the skills required to perform operation and maintenance on all types of rail infrastructure. The work comprises both maintenance and fault corrections. For example, the company performs maintenance on overhead line and signalling infrastructure, inspects tracks and points, and clears tracks and platforms from snow. Infranord also has an emergency on-call service for moore urgent situations. In extreme weather conditions that impact on the infrastructure, such as the situation in conjunction winter storm Gudrun a few years ago, Infranord plays a crucial role in the clear-up work. The same also applies in the event of train derailments and accidents.

Machinery Infranord has machinery, for track and point alignment, for track replacement and point installation work, as well as mechanical vegetation control. The machinery is an important element in Infranord's overall range of services.

ttåmtujkS

Operations 

Service

Workshops Infranord builds equipment for signal engineering and manufactures prefabricated rail products in its own workshop in Nässjö. Mechanical measurement services Infranord conducts mechanical measurement services in e.g. Sweden and Denmark. Using technically advanced recording vehicles, measurement of tracks and overhead lines are performed, as well as non-destructive testing of rails using ultrasound.

infranord annual report 2010  11

Construction Infranord plans and performs new construction, expansion and refurbishment projects within the railway sector. The market has traditionally comprised Sweden, although in the future there is clear ambition to operate in the other Nordic countries as well. As the Swedish rail infrastructure is almost exclusively owned by the State and managed by the Swedish Transport Administration, approximately 90 per cent of the year's sales of SEK 1,793 million constituted of services and products for the Administration. The competitive situation has become tougher during 2010, and several European rail contractors have expanded their operations in Sweden. Operations in 2010 Construction, infrastructure and contract projects within the Swedish rail sector amounted to almost SEK 10 billion in 2010. Infranord's market share amounted to 43 per cent in 2010. Infranord is competing with other rail contractors as well as with major Swedish construction companies. New assignments that have commenced during the year include several projects relating to track replacement and the upgrading of tracks, such as the Ställdalen–Hällefors, Ockelbo–Storvik and Velanda–Prässebo sections. Other major projects that have been conducted during the year include the completion of the City Tunnel in Malmö, track replacement on the Örebro– Hallsberg section, the refurbishment of Umeå

2010

Net sales, SEK million

2009

Net sales, SEK million

1,793 1,927

freight yard, electrical and signalling work on the Haparanda Line, and the replacement of signal boxes at Göteborg Central. Another major project is the complete upgrading of the section between Karlskrona and Emmaboda, where the contract is being performed in co-operation with the construction company Peab. This collaboration entails Peab building bridges, railway embankments and casting station platforms, while Infranord is responsible for track construction and the installation of overhead lines and signalling systems. The collaboration with Peab is a joint venture, and is the first in which Infranord has taken part. As a result, the forthcoming evaluation will be very important. Many of the anticipated investments in the Swedish rail network will, in all likelihood, take the form of collaborations between Infranord and other major players within the construction and civil engineering industry. The benefits include shorter lead times and greater cost-effectiveness in complicated projects. The future The investments in the Nordic railways will probably increase in future years, particularly in the form of a series of track replacement projects. At the same time, there is a shortage of production resources throughout the construction sector. It is anticipated that the assignments will increasingly entail Infranord assuming responsibility for management and specialist resources, while large parts of the actual production work will be

2010

Market share, %

2009

Market share, %

32 31

12  infranord annual report 2010Operations

The Bothnia Line After almost twelve years of construction, the Bothnia Line, a 190 km section of railway between Nyland and Umeå, was opened in August 2010. In return for an investment of SEK 15 billion, a modern railway has been created along the Norrland coast, providing a much sought-after increase in capacity for passenger and freight transport. The line is a single track railway, with passing tracks, and incorporates a total of 140 bridges and 16 tunnels.

Operations 

Infranord has been involved in building up the modern signalling system ERTMS (European Rail Traffic Management System), which is also becoming the standard throughout Europe. Infranord has also participated in the construction of the Umeå and Örnsköldsvik travel centres, and has been entrusted to look after the operation and maintenance of the whole of the Bothnia Line.

On 28 August 2010, the Bothnia Line was opened by King Carl XVI Gustaf according to a rolling schedule in four municipalities.

infranord annual report 2010  13

14  infranord annual report 2010Operations

City Tunnel The City Tunnel in Malmö is one of the largest infrastructure projects in Sweden in the past decade. The first guidelines for building a rail connection through Malmö were drawn up 20 years ago, with the idea of connecting it to the planned Öresund Bridge. The City Tunnel was opened in December 2010. At a cost of SEK 8.5 billion, there is now a 17 km rail connection, including 6 km in a tunnel under the city of Malmö. Infranord has been responsible for the majority of the rail engineering

Operations 

installations – a total of 17 km of track, in part running through two parallel tunnels, overhead lines, telecommunications work, cooling facilities in transverse tunnels, as well as the construction of 20 sets of points. In the face of stiff competition, Infranord has also been commissioned to assume responsibility for the ongoing operation and maintenance of the entire section, for a period of five years following the official opening.

infranord annual report 2010  15

outsourced to subcontractors. This will require the recruitment of new employees, continued training initiatives and the introduction of new supply methods. Service Infranord is the leading player in Sweden within the operation and maintenance of rail infrastructure. The work includes both maintenance and remedial action on faults. The activities within ­Service are divided into five regions: South, West, East, Central and North. The market principally comprises all the track owners in Sweden. The Swedish Transport Administration, which owns and manages all the State railways in Sweden, is the dominant track owner. Other track owners include municipalities, ports and industries. The Swedish Transport Administration is Infranord's largest customer, other major customers are Storstockholms Lokaltrafik (SL), Göteborgs Spårvägar, the Öresund Bridge, SSAB and LKAB. The Swedish rail market is now fully exposed to competition, with Infranord competing for example with European companies such as Strukton Rail, Balfour Beatty Rail and VR Track. Operations in 2010 During 2010, the work has been characterised by the introduction of a common working method in all regions. This change is intended to increase efficiency and ensure that Infranord's offers to its customers maintain the same level of quality and the same degree of service, irrespective of where in the country the work is carried out. A common working method also entails opportunities for increased flexibility and the more rapid implementation of improvements – it is easier for employees to move between projects in different parts of the country if the conditions are the same, and it is easier to introduce new working methods throughout the organisation. Infranord has won several major business assignments during the year. In April, Infranord won the Stockholm Central assignment, encom-

passing the operation of and remedial maintenance on the Älvsjö–Ulriksdal/Sundbyberg section, which also includes Stockholm Central Station. Stockholm Central is the busiest and technically most complicated section in the Swedish rail network. Decisive factors in Infranord winning the assignment included our ability to satisfy the stringent quality demands and our focus on safety issues. During 2010, Infranord has also been commissioned to operate and maintain the newly built City Tunnel in Malmö as well as the City Line in Stockholm (not yet complete). Other significant operation and maintenance contracts that have been won during the year are the Blekinge Coast Line, the Coast-to-Coast Line and the Jönköping Line. At the start of 2011, it also became clear that Infranord had won the assignment to look after the operation and maintenance of the railways in Malmö and southeastern Skåne. The work during 2010 has also been characterised by heavy snowfall, both at the start and the end of the year. Prior to the 2010/2011 winter, Infranord developed a new offer – "snow insurance". The snow insurance, which lies entirely outside of existing contracts, means that the Swedish Transport Administration can call for extraordinary resources to deal with extreme snow problems that arise in a particular area. The snow insurance also covers sections of track that are maintained by other rail contractors. The future Demand for advanced operation and maintenance services within the Swedish rail network is expected to increase in coming years. There is broad political consensus regarding investment in increased accessibility. As the largest player on the supplier side, Infranord is well prepared for new assignments. Infranord has the necessary resources at its disposal, possesses a good knowledge of the rail infrastructure throughout the country, as is working proactively to define future needs.

16  infranord annual report 2010Operations

Operation and maintenance contract as per 31 December 2010 Luleå

Gävle Borlänge

Stockholm

KONTRAKT GEOGRAFISKT

Göteborg

Nässjö

Infranord Andra entreprenörer Nedlagd bana

Malmö

2010

Net sales, SEK million

2009

Net sales, SEK million

Operations 

2,342 2,123

2010

Market share, %

2009

Market share, %

contract, geographical

 Infranord   Other contractors

48 53 infranord annual report 2010  17

Mechanical track condition measurement in Denmark An important part of the planning for the future operation and maintenance of sections of railway is continually to perform mechanical track condition measurement. Through this, data about the current condition of the track provides information about what investments

and work will be required in the future. In Denmark, Infranord has been commissioned for a period of four years, starting from August 2010, to assume responsibility for measuring the condition of tracks and overhead lines on all of Banedanmark's rail infrastructure.

18  infranord annual report 2010Operations

Machinery and own workshop Infranord's machine park comprises rail vehicles and other technical equipment that is adapted for the business. The machine park includes machines for track and point alignment, mechanical vegetation control, as well as specialist machines for tasks such as ballast cleaning, track replacement and point installation. The machine park is an important element in Infranord's overall range of services. To a lesser extent, Infranord also offers machinery for hire for contract and maintenance assignments. The renewal of the machine park will comply with the requirements and wishes that will most likely follow on from forthcoming assignments. During 2010, the work at Infranord's workshop in Nässjö was concentrated on building equipment for electrical and signal engineering. The previous production of prefabricated points that took place in Luleå was phased out during 2010 as a consequence of decreasing demand. Mechanical track condition measurement In autumn 2010, an independent unit for mechanical track condition measurement was formed within Infranord. In conjunction with this change, an application was submitted for accreditation according to the ISO 17020 standard.

Operations 

As a result of the change, the Measurement unit's independent status is guaranteed, which is decisive for future procurements. Demand for mechanical track condition measurement has been strong during the year. In Sweden, a large number of assignments have been carried out and several new assignments have been secured. Customers are offered well-developed technology and a machine park that is specialised for the task. During the year, Infranord won an assignment in Denmark comprising track condition measurement on Banedanmark's rail infrastructure for a period of four years. The assignment entails measuring the condition of tracks and overhead lines, thereby providing a foundation for future maintenance work. The assignment has meant a further strengthening of the Measurement unit's position on the Danish market. This in turn is improving the conditions for future business on a new market with a large proportion of privately owned track. In order to optimise the investments in the operation and maintenance of the railways, continual track condition measurement produces major benefits. Performing measurements on rail sections four times a year makes it easier to prioritise the efforts that are required to keep the tracks in the best possible condition.

infranord annual report 2010  19

Winter maintenance Winter maintenance includes keeping tracks, points and platforms free from snow and ice. The snow clearance work often takes place during intensive periods, and involves both mechanical and personnel resources. Prior to the 2010/2011 winter, Infranord developed a new service – snow insurance. The snow insurance, which lies entirely outside of

existing maintenance contracts, means that the Swedish Transport Administration can call for extraordinary resources to deal with extreme snow problems that arise in a particular area. The snow insurance is also available as an add-on service on sections that are maintained by other rail contractors.

20  infranord annual report 2010Operations

Operations 

infranord annual report 2010  21

Sustainability report All activities within Infranord should contribute towards growth that is sustainable in the long term from a social, environmental and financial perspective. Infranord's main priorities are health and safety for employees and contractors, as well as the company's own environmental impact.

Socially sustainable Infranord's working environment should be characterised by safety, job satisfaction and participation. Infranord should be a company where the experiences of all the employees are utilised, and where diversity is viewed as an asset for the business. 70,000 hours of safety training are performed each year.

Environmentally sustainable

2009 22.4

Infranord is working to prevent emissions and discharges to the air, land and water, as well as to reduce the use of resources with the focus on fuel consumption. The company should ­co-operate actively on environmental issues with customers, suppliers and stakeholders.

2010 18.9

Total emissions of greenhouse gases, ktonnes

Tonnes of carbon dioxide / sales

2009

2010

5.77 4.19

Financially sustainable Infranord is striving to implement continual improvements in its activities. Customers should feel that the company is supplying good-quality, cost-effective solutions, and the owner should receive long-term, significant value – a lot of railway for the money.

This is Infranord's first sustainability report. The sustainability report has been drawn up in accordance with Global Reporting Initiative's (GRI) guidelines, G3. Infranord's own assessment is that the sustainability report satisfies the requirements for applicability level C+, which is also confirmed by Deloitte AB.  The information presented in Infranord's sustainability report is based on an assessment of which sustainability areas are most important for Infranord's stakeholders, as well as the areas that are most important in order for Infranord to fulfil its assignments.   Infranord's sustainability report covers the 2010 calendar year. The report only covers Infranord's activities in Sweden. The subsidiary companies in Denmark and Norway did not conduct any activities during 2010.

22  infranord annual annualreport report2010 2010Sustainability report 22  infranord

Sustainable infrastructure Infranord builds and maintains railways. It is a business that helps people and freight to move about quickly, safely and with a limited impact on the environment. Customers, employees, owners and society at large require the business to be conducted with consideration for people and the environment. Customers For customers, it is vital for Infranord to deliver services at the right time, at the right price and with a high level of quality. Quality and delivery reliability also necessitate that the work is carried out with as little impact on the environment as possible. For several years, Infranord has been investigating customers' perceptions of the company through annual customer surveys. The surveys have consistently shown that customers are extremely satisfied with, and appreciate, Infranord's extensive knowledge regarding rail contracts as well as the company's technical expertise. Many customers also highlight the fact that Infranord focuses on safety in its work. The most recent survey, which was conducted in autumn 2010, shows that the potential for improvement primarily lies within the framework of how projects are followed up and how the company markets its offer. Customers are also requesting a proactive, shared dialogue focusing on business development. Employees For existing and potential employees, it is important for Infranord to be an attractive employer. This applies in particular to making it possible for employees to carry out their work duties safely. The working climate must also be characterised by job satisfaction, good leadership and good opportunities for development. The ongoing dialogue with the employees through appraisals, staff surveys and in day-to-day activities constitutes an important platform for development. Owners and the surrounding environment Infranord's owner, the Swedish State, imposes stringent demands for Infranord to deliver good value, to act in an environmentally sound manner

Sustainability report 

and to act as a role model in relation to customers, employees and the general public. The work is followed up regularly, including through financial and sector analyses. Objectives in addition to financial value creation are also followed up and evaluated. There are also other stakeholders in the surrounding environment, including some 200 towns in which Infranord has operations, authorities that regulate the business, trade unions that represent the employees, suppliers, business partners and other players on the market. Infranord delivers significant value One thing that all these stakeholders have in common is the expectation that Infranord will deliver services with consideration for people and the environment. The value that is generated, the earnings, are distributed between various stakeholders through the financial flows for which the business is the hub – salaries, supplier costs, taxes to the State and dividends to the owner.

STOMERS CU

SOCIETY

OWNER

Infranord's stakeholders

PLOYEES EM

infranord annual report 2010  23

Management and organisation Constant improvements are achieved through systematic work. Common guidelines and procedures constitute the framework for goal-oriented work, contributing towards development that is sustainable in the long term. The results are measured through regular follow-ups, and improvements are implemented following an analysis of these results. Common guidelines for corporate responsibility The documents that primarily guide the work within the prioritised areas are: • Environment and quality policy • Occupational health and safety policy • Code of Conduct The Code of Conduct was adopted during the year. It is aimed at all employees and, where applicable, at customers, suppliers and business partners. The Code of Conduct contains Infranord's business principles, as well as carefully defined commitments and requirements regarding working conditions, environmental and social responsibility, communication and economy. The Code of Conduct has been introduced through information at workplace meetings and in the staff magazine Uppspårat. The Code of Conduct will be included in all introductory training, and will be followed up both in the annual staff survey and via internal auditors. The employees' awareness of the content of Infranord's policies will also be followed up via internal audits. Corporate responsibility is a prioritised element of the sustainability work within Infranord, and also encompasses subcontractors. The Code of Conduct is appended to all agreements with business partners, and audits will be carried out during 2011 to check selected suppliers' compliance with the Code. Organisation Infranord's sustainability work is included in the Business development function. This also includes health and safety, as well as quality and environmental issues. Training within these areas takes place in co-operation with the personnel department. The manager of the Business development department is responsible for sustainability issues and for these appearing on the agenda for

the entire management team. There is also a sustainability co-ordinator who co-ordinates a task force comprising members from the areas of safety and the working environment, personnel, purchasing and marketing. The sustainability coordinator is responsible for following up and monitoring the outside world, as well as dialogue with stakeholders.

"Our priorities relate primarily to the health and safety of our employees and contractors" Niclas F. Reinikainen, Managing Director

Goal-oriented work Infranord's operations are characterised by preventive initiatives and constant improvements. The management systems are certified in accordance with ISO 14001 for the environment and ISO 9001 for quality. Infranord prioritises the work of developing overall goals for the entire operation, although with a particular focus in the fields of the environment, safety and employees. The goals are broken down in the manner that is relevant for the various parts of the business. The results are systematically followed up via a model for management by objectives, "Results-oriented management". The whole of Infranord's operation, including initiatives for an improved working environment and environmental performance, is made easier by the fact that common methods and processes are being introduced throughout the company. In practice, this means for example that work relating to staffing and the way in which projects are carried out is the same no matter where they are conducted.

24  infranord annual report 2010Sustainability report

Environment Infranord's work is contributing towards fast, safe and environmentally adapted transport. At the same time, it is impossible to avoid the fact that the operation has a certain impact on the environment. This relates primarily to greenhouse gas emissions from machinery and vehicles, as well as the handling of chemicals and waste. Systematic initiatives for reduced environmental impact Reducing the environmental impact of operations has a high priority. The objective is to reduce emissions and discharges into the air, land and water, as well as constantly to rationalise the use of resources. The focus lies on reducing fuel consumption and thereby carbon dioxide emissions from machinery and vehicles. The initiatives are guided by Infranord's environment and quality policy. An ISO certified environmental management system makes the day-to-day activities easier. All the guidelines can be found on Infranord's intranet, Insidan. Focus on fuel consumption The debate regarding climate change has focused attention on reduced fuel consumption and hence reduced carbon dioxide emissions. Climate change can result in changed weather conditions. For example, Infranord's operations may be affected by powerful storms, where fallen trees cause disruption to overhead lines or give rise to working environment risks in conjunction with the clearance work. At the same time, an increased focus Direct energy use per primary energy source GJ

2010

2009

32,905

Diesel

16.1

18.8

2,351

Petrol

2.7

3.5

Petrol

230,896

Energy use is ascertained using a new calculation method, which means that the figures are not comparable with previous years. Infranord intends to continue reporting direct energy use in accordance with this method. The calculations are based on statistics regarding diesel, petrol and ethanol consumption.

Sustainability report 

Carbon dioxide emissions

2010

195,640

Total

Total emissions of greenhouse gases ktonnes

Diesel E85

on climate issues in society can benefit the expansion of the railways, as trains are a carbon dioxideefficient means of transport both for passengers and freight. This increases the business opportunities for Infranord, which may also be strengthened by a clear, environmentally conscious profile. Infranord's goal is to reduce the total volume of consumed fuel in its own vehicles and machines by 3 per cent during the period 2010–2012 (in comparison with average consumption over the past two years). When it comes to reducing fuel consumption and emissions of greenhouse gases, the greatest potential for Infranord lies in the optimum planning of where and when the machines should be used, thereby shortening transport routes. Eco-driving is another initiative that Infranord is implementing in order to keep the environmental impact down, and this form of driving has been introduced in the environmental training during the year. The training, in combination with other practical measures, has contributed to more conscious behaviour and consequently reduced consumption.

Ethanol Total

0.1